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Wal-Mart, Netflix conspired to create monopoly, suit alleges

January 07, 2009|BLOOMBERG NEWS

Wal-Mart Stores Inc. and Netflix Inc. were accused of conspiring to create a monopoly for online video rentals in a consumer lawsuit alleging that the collusion drove up prices.

The two companies agreed in 2005 that Wal-Mart, the world's largest retailer, would close its online rental business and refer customers to Netflix, which would promote Wal-Mart's DVD movie sales, according to the lawsuit filed in federal court in San Francisco.

The accord eliminated competition, enabled Netflix to maintain monopoly power and led Blockbuster Inc. to raise subscription rental prices by $3 to meet Netflix's higher prices, the Jan. 2 complaint alleges.

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